Toast, Inc. Class A

to welcome everyone to the Toast Earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to queue for a question during this time, simply press star followed by the number one on your telephone keypad. And if for any reason you'd like to withdraw your question, press the pound key. I'll now turn the call over to Michael Sineau, Senior Vice President of Finance. You now may begin.

Thanks, Cole. Welcome to Toast's earnings conference call for the third quarter ended September 30th, 2023. On today's call, our CEO, Chris Camperato, COO, Aman Narang, and CFO, Elena Gomez, will open with prepared remarks, which will be followed by our Q&A session. Before we start, I'd like to draw your attention to the safe harbor statement included in today's press release. During this call, we'll make statements related to our business that may be considered forward-looking within the meaning of the Securities and the Exchange Act. All statements, other than statements of historical facts, are forward-looking statements, including those regarding management's expectations of future financial and operational performance and operational expenditures, location growth, future profit and margin outlook, expected growth and business outlook, including our financial guidance for the fourth quarter and full year 2023. Forward-looking statements reflect our views only as of today, and except as required by law, we undertake no obligation to update or revise these forward-looking statements. Please refer to the cautionary language in today's press release and our SEC filings for a discussion of the risks and uncertainty that could cause actual results to differ materially from our expectations. During this call, we will discuss certain non-GAAP financial measures. These non-GAAP measures are not intended to be a substitute for our GAAP results. Please refer to our earnings release and SEC filings for detailed reconciliations of these non-GAAP measures to the most comparable GAAP measures. Unless otherwise stated, all references on this call to cost of revenue, gross profit and gross margin, sales and marketing expense, research and development expense, and general and administrative expense are on a non-GAAP basis. Finally, both the press releases and a replay of this call, including the accompanying investor presentation, will be available on our investor relations website at investors.toasttab.com. And with that, let me turn the call over to Chris.

Thank you, Michael, and thank you, everyone, for joining us this afternoon. Our focus has been on delivering durable and efficient growth. and our third quarter results reflect execution on that objective. We added over 6,500 net locations in the quarter and ARR grew 40% year over year. We continue to balance top line growth with driving efficiencies as we scale the business and adjusted EBITDA total 35 million in the quarter. The execution against our focus strategy to drive location growth serve all segments of the restaurant industry and bold product innovation to better serve our customers and open up new segments of the market is both driving strong results and has us well positioned to sustain this momentum going forward. As we announced in September, Aman will take over as CEO at the start of 2024. Looking back over my nine years as CEO, I am incredibly proud of the accomplishments of the Toast team. Together, we've scaled to serve nearly 100,000 restaurant locations with over $1.2 billion in ARR. We've built a company culture with strong values and an employee base that embraces our customer-centric mission to be the trusted restaurant technology partner. At the same time, we've built a scalable, durable business that's generating sustainable, positive, adjusted EBITDA and free cash flow. Our innovation mindset and our products have also expanded significantly over that time period as we deliver on our mission. We've broadened the types of restaurants that we serve and have made inroads across the entire U.S. restaurant TAM. We have also evolved into a multi-product platform company with solutions to help restaurants drive growth, build deeper connections and experiences with their guests, and improve operations and manage their costs. Toast has been on this journey for over a decade, and we proudly serve an industry that has navigated many ups and downs. There's no better example than over the last few years. Restaurant operators responded to unprecedented changes, quickly expanding their service models to meet evolving consumer demands. Through it all, restaurants remain a central part of consumers' daily lives. More recently, We've seen consumers spend moderate, and I'm confident restaurants will navigate the uncertain macro environment with the same resiliency and tenacity they always do, and this battle-tested industry will continue to thrive well into the future. Toast is side-by-side with our customers every step of the way and is often one step ahead, helping restaurants adapt and thrive no matter the circumstance. and we're just getting started. The SMBTAM remains a large opportunity for us. Enterprise restaurant groups are in the early days of adopting cloud technologies, and a big international opportunity lies ahead. We are better positioned than ever before to expand and continue to build adjacent growth opportunities as we capitalize on the generational opportunity to be the technology platform for restaurants and transform the industry. I've known Iman for 17 years, having worked with him before I joined Toast. First and foremost, as a co-founder of Toast, he brings a strong founder's mentality to the CEO seat where he will continue to raise the bar on execution and innovation. He intimately knows our customer base and has shaped much of the company through his many roles across the organization, from overseeing product to sales and customer success. So I'm confident that as Aman steps into the CEO role, he'll lead Toast to new successes. And he is surrounded by the most talented leadership team that I've had the opportunity to work with across my career. To wrap up my last quarterly earnings call, thank you to our Toasters and to our customers. We've accomplished a lot as a team. The enthusiasm you bring to our mission sustains our momentum, and I'm excited for what lies ahead. Now I'll turn the call over to Aman.